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Yergin: Oil crash has similarities to 1998, 1930s

Yergin: Oil crash has similarities to 1998, 1930s thumbnail

The Permian Basin oil and gas industry is caught in the crossfire of two crises: a demand shock caused by the impact of the coronavirus, and a supply shock as Saudi Arabia and Russia flood the markets with crude as part of a price war.

“Two crises have hit the oil market at the same time – the coronavirus and an oil market war launched in the middle of a pandemic,” said Daniel Yergin, vice chairman of IHS Markit.

“Every crisis is different,” he said in a phone interview. “Some features of this remind me of 1998 and some remind me of the 1930s.”

In 1998, oil producers increased production into a shrinking market to the point that storage was overwhelmed, and oil prices fell to $10 a barrel, he said. That’s similar to the 1930s, when giant oil fields such as the one in East Texas came online in the midst of the Great Depression, driving oil prices to 13 cents a barrel.

“We could again run out of storage,” said Yergin, who is preparing for the release of his new book, “The New Math: Energy, Climate and the Clash of Nations.”

Also different this time is the impact of low oil prices, he said.

“Normally, low oil prices act like a tax cut,” he said. “But that won’t work if schools are closed, airplanes aren’t flying, and people are working from home.”

Until the world gets to the other side of the virus peak and people start leaving their homes again, the economic stimulus of low oil prices won’t be felt. Yergin said it will be about two months before that happens.

“That’s what’s different from other periods of low oil prices,” he said. “This started in the first quarter with oil demand in China dropping, and now, by the second quarter, demand decline has spread to Europe and North America.”

The good news is the demand decline – he preferred demand pause to demand destruction – isn’t permanent, he said.

The market share tug-of-war between Saudi Arabia and Russia is a different matter, though.

“I do think this oil price war is aimed by the Saudis not just at Russia but at U.S. shale. Exporters were shocked by the growth in U.S. production,” he said, noting that between 2016 — when members of the Organization of Petroleum Exporting Countries and affiliated countries such as Russia agreed to production limits — and 2019, U.S. production grew 60 percent. “That’s astonishing, really,” he said.

The Saudis are looking at the tussle with Russia in terms of market share, while Russia sees it as political, Yergin said.

“They believe the growth of U.S. energy independence that U.S. shale has given to U.S. foreign policy has facilitated sanctions. The Russians don’t like sanctions, and they really don’t like the sanctions that blocked the Nord Stream 2 pipeline just weeks from completion. They think the U.S. wanted it shut down so they could sell more U.S. gas.”

Saudi’s actions are kind of an economic attack on U.S. shale, Yergin said. Washington needs to pay attention to Texas’ electoral votes, the second most in the nation as the government ponders how to respond, he said.

“During the primary campaign, I realized the country doesn’t understand the economic benefits of shale, not just to the oil and gas industry, not just to Texas, not just to the Permian Basin, but to the country,” he said. “It’s been important to the recovery of the industrial Midwest. That’s just not part of the national dialogue, which is why we have this distorted conversation about energy. We need a better understanding of what shale means to the well-being of the U.S.”

Shale producers will feel the brunt of the nation’s output decline over the next year, especially in the Permian Basin, the center of the nation’s shale production, Yergin said.

“Shale was already going through a crisis developing a new social contract with investors, giving money back to investors. This is more challenging,” he said.

His company “now thinks we’re headed for into recession. We will get to the other side. Hopefully the signs are we will recover quickly (from the virus) because of artificial intelligence. This is not a 1950s epidemic,” he said.

mrt



36 Comments on "Yergin: Oil crash has similarities to 1998, 1930s"

  1. Davy on Mon, 23rd Mar 2020 4:30 am 

    The jews are to blame we need to throw the bastards in the ovens now!

  2. Theedrich on Mon, 23rd Mar 2020 4:32 am 

    There are many indications that this is the end: the Chicom virus;  the stress caused by insane no-win American military overstretch in Mohammedania;  the Saudi-Russian competition to flood the oil market;  the importation and glorification of low-IQ sludge from Planet 3 to overwhelm and obliterate the White race;  the general, self-deluding U.S. inability to grasp reality;  the absurd concept of Yankeeland as the “indispensable” nation;  the Democrat selection of an Alzheimer’s patient as the candidate for president in the coming November election;  the oligarchic control of politics and its attendant corruption;  the unstopping monetary inflation to cover grotesque national debts;  among many other woes.

    It is no wonder that many of the ultra-rich are finding hideout shelters for themselves nowadays.  They sense that the current absurdity cannot go on much longer.

    If the current dive over the Seneca cliff is not halted, the end of the imperium Americanum is the only possible consequence.  But this is what the masses wanted.  Pride goeth before a fall.

  3. Sissyfuss on Mon, 23rd Mar 2020 11:04 am 

    This is the crash we doomers were expecting. Just not in this form.

  4. Duncan Idaho on Mon, 23rd Mar 2020 12:22 pm 

    This is the crash we doomers were expecting.

    Late stage capitalism has been on the ropes for quite a while. This has just quicken its death.

    The Thugs are still able to rape for a while.

  5. Abraham van Helsing on Mon, 23rd Mar 2020 1:26 pm 

    Russian pipe-layer AKADEMIK CHERSKIY underway to the Baltic Sea to finish the work of the Dutch Allseas ship, that went through its knees after the threat of US sanctions:

    https://www.vesselfinder.com/vessels/AKADEMIK-CHERSKIY-IMO-8770261-MMSI-273399760

    Many expect additional US sanctions. In that case we should prepare for an all-out trade war, together with our Russian and Chinese friends.

    The Dutch company Philips, with Dutch knowledge, produces ventilators with Pittsburgh hands, for the European market. ALL production is likely going to be confiscated by the America First government:

    https://www.nrc.nl/nieuws/2020/03/23/philips-vreest-amerikaanse-vordering-beademingsapparatuur-a3994610

    We should stop seeing these people as our friends. They never were.

  6. Abraham van Helsing on Mon, 23rd Mar 2020 1:34 pm 

    Dutch government persco just finished:

    https://www.geenstijl.nl/5152566/live-corona-persconferentie-kabinet/#comments

    – no gatherings whatsoever until JUNE 1
    – open anger with behavior of some young people who don’t give a f*
    – fines of 400€ for people who brake the rules
    – no birthday parties
    – beaches, forests can be closed by mayors
    – hairdressers closed

    But NO lockdown. You can still go out, but alone or with family. No groups.

  7. Richard Guenette on Mon, 23rd Mar 2020 1:38 pm 

    Europe should turn its back on America and normalise relations with Russia.

  8. Abraham van Helsing on Mon, 23rd Mar 2020 3:34 pm 

    German news: Germany approaches peak infections, with extremely low death toll.

  9. whoa supertards pls love supremacist muzzies more for the grater supremacist muzzies bennie on Mon, 23rd Mar 2020 3:36 pm 

    supertard juanP please show me how to avatard
    i want to be pink fish
    pls change ur underwear after 5 days ok supertards
    thanks

  10. Abraham van Helsing on Mon, 23rd Mar 2020 3:38 pm 

    “Has Italy turned the tide on coronavirus? Daily death toll falls for SECOND consecutive day as disease claims 602 new victims offering glimmer of hope that national lockdown is working two weeks after it was put in place“

    https://www.dailymail.co.uk/news/article-8141861/Has-Italy-started-turn-tide-coronavirus.html

  11. whoa supertards pls love supremacist muzzies more for the grater supremacist muzzies bennie on Mon, 23rd Mar 2020 3:43 pm 

    On This Day…
    Mar 23, 2018: Carcassonne, France
    An Allah-praising gentleman guns down three innocent
    people then slashes the throat of a police officer who
    traded himself for hostages at a supermarket: 3 Killed

    /ht supertard glenn roberts thereligionofpeace

    it seems like this yesterday but it’s been a couple of years now

    supertards, please love supermacist muzzies more for the sake of grater supreamcist muzzies

    note the humor

  12. Duncan Idaho on Mon, 23rd Mar 2020 3:50 pm 

    1919 — Italy: Benito Mussolini founds the Fascist Party.

  13. Duncan Idaho on Mon, 23rd Mar 2020 3:58 pm 

    1987 — US: Dog race-track owner Jerry Collins donates $1.3 million of the $8 million Oral Roberts needs to keep God from killing him. Dog, of course, is God spelled backasswards.

  14. Abraham van Helsing on Mon, 23rd Mar 2020 4:11 pm 

    “1919 — Italy: Benito Mussolini founds the Fascist Party.“

    Mussolini ruled 1922-1943.

    In that period the Italian state killed less than 10 people internally.

    US ally USSR killed 1917-1939 internally millions.

    Now lets all celebrate the victory of communism over fascism.

    The global public mind is filled with pictures (lies) by jewish-run Hollywood, the real victor of WW2.

  15. Duncan Idaho on Mon, 23rd Mar 2020 4:24 pm 

    experts urge Trump not to roll back social restrictions

    Don’t think the Fat Boy cares–

  16. whoa supertards pls love supremacist muzzies more for the grater supremacist muzzies bennie on Mon, 23rd Mar 2020 4:26 pm 

    wen i searched muzzie FGM enjoy croissants i got hundreds pics

    now nothing

    muzie infiltr8 (((supertard))) sergey google

  17. Duncan Idaho on Mon, 23rd Mar 2020 4:33 pm 

    The head of this association of delinquents, Mussolini, while yellow with rancour and fear and trying to cross the Swiss frontier, has been arrested. He must be handed over to a tribunal of the people so it can judge him quickly. We want this, even though we think an execution platoon is too much of an honour for this man. He would deserve to be killed like a mangy dog.

  18. Duncan Idaho on Mon, 23rd Mar 2020 4:40 pm 

    Their bodies were left in a heap, and by 9:00 a.m. a considerable crowd had gathered. The corpses were pelted with vegetables, spat at, urinated on, shot at and kicked; Mussolini’s face was disfigured by beatings.——After a while, the bodies were hoisted up on to the metal girder framework of a half-built Standard Oil service station, and hung upside down on meat hooks.[42][43][44] This mode of hanging had been used in northern Italy since medieval times to stress the “infamy” of the hanged.

    Seems like they we a bit pissed?

  19. DerHundistLos on Mon, 23rd Mar 2020 5:03 pm 

    Friend JuanP-

    You are a big man and I respect you in your search for knowledge and understanding. Many people react defensively when confronted with an alternative explanation, even if it is truthful.

    I like to think I am similar to you in this regard. Thank you for taking the time and trouble to write a thoughtful reply. We may not agree on everything all of the time, but we have always displayed respect.

  20. Abraham van Helsing on Mon, 23rd Mar 2020 5:23 pm 

    “Seems like they we a bit pissed?“

    Communists are natural born killers.

  21. Abraham van Helsing on Mon, 23rd Mar 2020 5:36 pm 

    Ouch, the source could not only be Wuhan:

    https://www.moonofalabama.org/2020/03/coronavirus-how-to-lift-lockdowns-and-why-we-should-all-wear-masks.html#comments

    Remuzzi says he is now hearing information about it from general practitioners. “They remember having seen very strange pneumonia, very severe, particularly in old people in December and even November,” he says. “This means that the virus was circulating, at least in [the northern region of] Lombardy and before we were aware of this outbreak occurring in China.”

    Looks like corona was planted in Italy.
    Iran probably same story.
    And Wuhan.

    The plot thickens.

    Ready for WW3?

  22. makati1 on Mon, 23rd Mar 2020 6:32 pm 

    Abe, this was a US bio attack on the countries most hated by the neocons. Especially China. It is only logical and the longer this goes on, the more evidence of same will be exposed. The US is dying and will use everything in its arsenal to stay in power, including nukes, maybe. We shall see.

  23. Davy on Mon, 23rd Mar 2020 6:36 pm 

    Plot thickens……

    lol, more cloggo fantasy conspiracies. Cloggo, it’s a Chinese virus and what is so hilarious is how hard the anti-American crowd try to change that. It is Chinese. The pandemic is Chinese becuase they lied and repressed the event and that allowed it to infect the world. It is unclear yet if it was a lab accident or an animal to human in nature infection. You are so gullible and wounded. EuropeUp is toast. makato’s AsiaUp is toast. LMFAO

    ready for the great global recession??

  24. Davy on Mon, 23rd Mar 2020 6:40 pm 

    “Abe, this was a US bio attack on the countries most hated by the neocons. Especially China.”

    This is an Asia fuck up and a world killer just like all the pollution from that part of the world

    “It is only logical and the longer this goes on, the more evidence of same will be exposed.”

    LMFAO. almost all the very good evidence points to China on multiple levels from the virus starting there to the suppression of the warning of the event that allowed the pandemic. Nothing out of your pie hole is worth a listen, makato. You have been telling us for months now this virus is nothing. You are a complete failure as bad as juanPee, the lunatic.

  25. Abraham van Helsing on Mon, 23rd Mar 2020 11:47 pm 

    “This is an Asia fuck up and a world killer just like all the pollution from that part of the world”

    The only thing our man-child from the Ozarks will ever come up with is “LMFAO”.

    He completely ignores the quoted argument from Moonofalabama, namely that the strange pneumonia surfaced in Northern Italy as early as November, before the outbreak in Wuhan, implying that Italy and Wuhan (and likely Iran) were infected (read: doped) INDEPENDENTLY.

  26. makati1 on Tue, 24th Mar 2020 12:55 am 

    Cloggie, The Orange ape in the White House is ignorant of reality, just like Davy. This was started in several countries last year and just surfaced in China after it was diagnosed as a new disease.

    I believe it was designed in the closed bio-lab in Maryland and distributed to cause the US’ ‘enemies’ the most trouble. But, as most things the US tries to do, it obviously back-lashed. I see a terrible next few months to a year in the US as this progresses and the economy goes down.

  27. joe on Tue, 24th Mar 2020 2:26 am 

    I can see lockdown lasting only a couple of weeks. In the free world opposing parties are supposed to get a say, therefore in a crisis eg a war, we a supposed to suspend opposition and agree to agree. Free countries are not under the jackboot of totalitarianism therefore without a target to shoot at it’s useless to close locations and point guns around. Sadly the fallout from this will be far worse than anything we have so far seen. If history is anything to go by expect at minimum political turmoil and even civil wars. The elderly will get forgotten in the coming debate about about lockdown versus economic damage. The period ahead of us now due to the bubble that was burst is likely to be defined about how corporate America is allowed to behave in relation to whether or not it CAN use bailout funds to simply carry on as normal which is to say without regard to the moral hazard of their duty of care and maximum shareholder value. By enabling more bad behaviour we will only become LESS prepared for the next death virus crawling out of the sweating steaming oriffices of Asia.
    Tropical areas are literally petri dishes, unrestricted travel to and from those areas under current globalised rules gas us where we are today. Where we go next will not be defined by lockdown but by taking a hard nosed look at what we can do to stop the NEXT outbreak, for now we are simply in panic mode as governments must appear to be doing SOMETHING. Hopefully a warm summer might buy us some time to make progress towards a vaccine. But as soon as emergency measures are relaxed and crowds allowed to gather, the millions of freshly unemployed around the world are going to erupt. Throwing a trillion here and a trillion there wont stop toxic waste from the unsanitary parts of the world from packing itself into another Wuhan tourist and heading off for a business trip to New York at 12 noon on Monday with a few tourist sights planned in for after. The old order must end.

  28. makati1 on Tue, 24th Mar 2020 4:29 am 

    “…we will only become LESS prepared for the next death virus crawling out of the Amerikan bio-labs.” (Some 400 around the world, BTW) There! Fixed that miscommunication by ‘joe’.

    The “petri dish” is made in Amerika, just like ALL the world’s troubles for the last 75 years, at least. The Korean War, Vietnam, and on and on. Until the US is taken down, no place on Earth is safe. Not even in Amerika, as the tax slaves are beginning to find out. I hope this is the beginning of the end of the empire of greed and killing. So be it! And about time!

  29. Abraham van Helsing on Tue, 24th Mar 2020 4:35 am 

    “Free countries are not under the jackboot of totalitarianism… their duty of care and maximum shareholder value.”

    Joe rambles on about the “Free West”, the only territory dedicated to the intentional demise of its own original citizens.

    Here Peter Hitchins about the virtues of said “free West”:

    https://www.dailymail.co.uk/debate/article-8032787/PETER-HITCHENS-ultra-left-silent-revolution-took-Britain.html

    “PETER HITCHENS: How the ultra-left silent revolution took over Britain”

    The post-1945 West and the product of the likes of joe esquire, empire dave and the not-so-benevolent supervision of the mobster-tribe, is something that needs to be destroyed to the core and rebuild from the ground up.

    Trump, Brexit, Corona, Putin offer that opportunity on a silver platter.

    #FuckShareholderValue

  30. Abraham van Helsing on Tue, 24th Mar 2020 4:43 am 

    Got that one coming:

    “Tokyo 2020: Olympics to be postponed until 2021, says IOC member”

    https://www.bbc.com/sport/athletics/52002474

  31. Abraham van Helsing on Tue, 24th Mar 2020 5:44 am 

    Zero emission from logistics transport coming to Groningen in 2025:

    https://cleantechnica.com/2020/03/19/groningen-all-city-logistics-to-create-zero-emissions-by-2025/

  32. Davy on Tue, 24th Mar 2020 5:59 am 

    “He completely ignores the quoted argument from Moonofalabama, namely that the strange pneumonia surfaced in Northern Italy as early as November, before the outbreak in Wuhan, implying that Italy and Wuhan (and likely Iran) were infected (read: doped) INDEPENDENTLY.”

    Moon of Alabma is the same guy that said this virus ain’t shit!! I follow the Moon of Alabama. He is definitely a saker type with anything anti-American. That should be a hint to a normal person.

  33. Davy on Tue, 24th Mar 2020 6:02 am 

    “Cloggie, The Orange ape in the White House is ignorant of reality, just like Davy. This was started in several countries last year and just surfaced in China after it was diagnosed as a new disease.”

    The two of you have got most everything wrong in the past. At least you could be good losers and pat me on the back for getting things right! LMFAO

  34. I AM THE MOB on Tue, 24th Mar 2020 11:38 am 

    Biden praised journalists yesterday for
    ‘putting it all on the line for all of us’.

  35. I AM THE MOB on Tue, 24th Mar 2020 11:41 am 

    Watch the Bell Curve

    Infectious diseases follow a bell curve called Farr’s law.
    https://en.wikipedia.org/wiki/William_Farr

    A virus doesn’t grow linearly forever. It accelerates, plateaus, and then declines. The CDC’s “bend the curve” or “flatten the curve” reflects this natural reality.

    As COVID-19 spreads and declines (which it will decline despite what the media tells you), every country will follow a similar pattern.
    https://jamanetwork.com/journa…/jama/pages/coronavirus-alert

    Sorry to spoil the ending.

    But now you know. And WHO is your daddy now?

    LOL

  36. I AM THE MOB on Tue, 24th Mar 2020 11:43 am 

    Why isn’t Putin doing anything? Maybe because he knows WHO is behind the WHO.

    LOL

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